Here’s what Morgan Stanley analyst Adam Jonas says about the topic:
This is, without a doubt, the biggest change affecting the global auto industry. The dollar versus the weak yen will make the Japanese automakers richer and they can use those profits to target more-aggressive growth. Ford and GM are in their bulls-eye. This is a real threat.
What can Detroit do?
Unfortunately, Detroit isn’t left with too many options. Its lobbyists in Washington are crying bloody murder, which is mostly falling on deaf ears. The U.S. government can’t exactly call out the Japanese for currency manipulation, as that would be akin to the pot calling the kettle black. Detroit can only hope that the politicians can put some pressure on the Japanese or give incentives for them to produce more of their vehicles in North America, which would reduce some of the financial advantage.
There isn’t much that investors can do besides keep a close eye on the value of the Japanese yen. An investor in either Ford or GM would be wise to watch how Toyota and Honda use this advantage. This is a significant development and not something Detroit executives wanted to deal with while trying to make a comeback from the dark days of the recent recession. This won’t deter me from holding on to my shares in Ford Motor Company (NYSE:F). I’m fully trusting that Detroit executives, along with the U.S. government, can find ways to mitigate their disadvantage.
The article Japanese Advantage Set to Derail Ford and GM? originally appeared on Fool.com and is written by Daniel Miller.
Fool contributor Daniel Miller owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.
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